Climate Finance Roadmap For Livestock in Latin America and the Caribbean

This report by the Climate Policy Initiative (CPI) provides a strategic roadmap to scale climate finance for sustainable livestock systems in Latin America and the Caribbean (LAC). It identifies a massive funding gap, where current flows are estimated at only USD 100 million annually against needs of USD 23.2 to 25.2 billion. The document analyzes investment barriers—including governance, physical climate, and macroeconomic risks—and proposes a combination of blended finance instruments and policy reforms to attract private capital, particularly for smallholder farmers.

• There is a severe underfunding of livestock systems globally and specifically within Latin America and the Caribbean (LAC). Globally, less than USD 240 million in climate finance is directed to livestock, leaving a USD 181 billion gap. In the LAC region, annual flows averaged USD 100 million in 2021/22, while annual needs are estimated between USD 23.2 and 25.2 billion.
• Livestock systems in LAC are a primary driver of regional emissions, accounting for approximately 28% of total regional emissions. Within the Agriculture, Forestry, and Land Use Change (AFOLU) sector, which represents 54% of regional emissions, livestock is responsible for about half. Key drivers include enteric fermentation, manure management, and land use conversion, with cattle ranching causing 72% of deforestation in Brazil.
• Investment in the sector is hindered by six primary risk categories: governance, financing, physical climate, market, infrastructure, and nature. Governance risks include inconsistent land tenure and policy shifts; financing risks involve currency volatility (notably in Argentina); and physical climate risks are intensified by El Niño, affecting forage quality and animal health.
• There is a significant mismatch between the risk-return profiles of livestock investments and the preferences of private investors. Public investors (governments, MDBs, and DFIs) are currently the most suitable for these investments due to higher risk tolerance and development mandates. Private investors, such as PE and VC firms, are largely limited to ag-tech or large-scale farms in Brazil and Mexico where risks are lower and ticket sizes are more optimal.
• Small-scale farms face structural barriers that make them almost entirely dependent on public funding. These include a lack of collateral, high transaction costs for lenders due to dispersed geographies, and a mismatch in loan size and repayment schedules. Even with improved finance strategies, the report suggests small farms remain heavily reliant on public capital.
• The report proposes several financial and policy solutions to bridge the gap. Financial tools include blended finance with first-loss capital, patient capital (5-10 year repayments), and FX hedging tools. Policy solutions include implementing natural capital accounting, standardizing climate reporting, and investing in rural digital and physical connectivity infrastructure.
• Scenario modeling indicates that a 'Business-as-Usual' (BAU) approach is insufficient. An 'Improved Finance Strategies' (IFS) scenario increases private participation through catalytic public finance. An 'Improved Finance and Policy Strategies' (IFPS) scenario, which combines financial tools with regulatory reforms, maximizes investor alignment and further diversifies the capital mix, particularly for small farms.
• Sustainable livestock practices are categorized into five investable areas: agroforestry/silvopastoralism, sustainable feed production, agriculture extension, manure management, and grasslands management. Nature-based solutions like silvopasture are highlighted as critical but often poorly aligned with conventional financing instruments.

APA

Kirchherr, A., Alberti, C., Barron, M., Bansal, S., Sikka, A., & Strinati, C. (2025). Climate Finance Roadmap For Livestock in Latin America and the Caribbean. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/07/Climate-Finance-Roadmap-for-Livestock-in-LAC.pdf

Chicago

Kirchherr, Alexandre, Caroline Alberti, Mairéad Barron, Shreya Bansal, Aanandita Sikka, and Costanza Strinati. Climate Finance Roadmap For Livestock in Latin America and the Caribbean. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/07/Climate-Finance-Roadmap-for-Livestock-in-LAC.pdf.

Wikipedia

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BibTeX

@techreport{kirchherr2025climate, author = {Kirchherr, Alexandre and Alberti, Caroline and Barron, Mairéad and Bansal, Shreya and Sikka, Aanandita and Strinati, Costanza}, title = {{Climate Finance Roadmap For Livestock in Latin America and the Caribbean}}, institution = {Climate Policy Initiative}, year = {2025}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/07/Climate-Finance-Roadmap-for-Livestock-in-LAC.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }